Taiwanese machine-tool makers should raise their competitiveness in China by developing value-added services or product differentiation, Tongtai Machine and Tool Co Ltd (東台精機) chairman Yen Jui-hsiung (嚴瑞雄) said.
“We cannot just lie there and wait for the government to save us from the impacts of China-South Korea free-trade pact or the weak yen price challenge,” Yen told reporters during an event hosted by the Ministry of Economic Affairs in Greater Kaohsiung on Sunday. “We have to improve ourselves,”
Tongtai, founded in 1969 and located in Kaohsiung’s Luzhu District (路竹), is the nation’s second-largest machine-tool maker.
Its products include processing systems for printed circuit boards, computer numerical control lathes and vertical tapping and machining centers.
Yen said the continual yen depreciation against the US dollar has already reduced price differences between Taiwanese machine-tool makers and their Japanese peers.
However, an ability to provide total solutions to customers could be Taiwanese machine-tool makers’ advantage, he said.
“Clients do not just want to buy the machines, they want to know how to use the machine efficiently to produce their products,” Yen said. “We can customize their machines, write programs for them and teach them how to use them.”
“That’s an example of a value-added service,” which helps Tongtai to stand out from its Japanese peers, he added.
Yen said he hopes the government would sign the cross-strait trade in goods agreement with China soon, but that Taiwanese companies should keep moving on their own.
German machine-tool makers’ market share has been growing fast in China over the past few years, showing that the tariff issue is just one of the challenges in the market, but not everything, he said.
Despite German products generally costing four to five times more than their Taiwanese counterparts, Chinese clients still want to buy German-made products, Yen said.
That suggests Chinese customers are not only looking for low-cost products, but they also buy expensive machines that are worth paying for, he said.
“If we can offer high-quality products, then even if we have to pay tariffs, we still have an advantage in the market,” he said.
Tongtai reported a net income of NT$251.11 million (US$8.11 million) for the last quarter, or NT$0.98 per share, surging 1.4 times from last year’s NT$103.22 million and rising 90.55 percent from the previous quarter’s NT$131.78 million.
Sales last month increased 27.64 percent year-on-year to NT$741.22 million, pushing total sales for the first 10 months of the year to expand by 23 percent to NT$7.53 billion from last year’s NT$6.12 billion.
Industrial Development Bureau Director-General Wu Ming-ji (吳明機) said not every machine-tool maker in Taiwan is as good as Tongtai.
“Taiwanese companies could save the 5 percent tariff cost and use the money to raise their competitiveness by doing research and development,” Wu said.
Taiwan’s machine-tool exports rose 5 percent to US$317 million last month from a year ago on rising exports to China and the US, data compiled by the Taiwan Machine Tool and Accessory Builders’ Association showed last week.
Machine tool exports to China reached US$109.59 million last month, up 15.7 percent from last year’s US$94.72 million, while those to the US increased 9.5 percent to US$39.86 million, the data showed.
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